Multilateral Investment Guarantee Agency Enhancing ... · TMB-Ayesa-Inelectra O&M O&M Contract Line 1 Metro Project Project: Construction of first line of Republic of Panama metro-rail,

MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP 1

Multilateral Investment Guarantee Agency Enhancing Investments in Emerging Countries January, 2013


1. MIGA in the World Bank Group 2. Typical Risks Faced by Investors in

Developing Countries 3. Credit Enhancement Solutions 4. MIGA’s Value Added 5. MIGA’s Performance Appendix

• MIGA Underwriting • Other project examples • MIGA Contacts


World Bank Group

IBRD International Bank for Reconstruction and Development

IDA International Development Association

MIGA Multilateral Investment

Guarantee Agency

To promote institutional,

legal and regulatory

reform

Governments of poorest

countries with per capita

income of less than

$1,025

- Technical Assistance

- Interest Free Loans

- Policy Advice

To promote cross-border

investments

Foreign investors in

member countries

Credit Enhancement and

Political Risk Insurance for

Financial Institutions (loans)

and Investors (equity &

shareholders loans)

Est. 1945 Est. 1960

IFC International Finance Corporation

To promote private sector

development

Private companies in

member countries

- Equity/Quasi-Equity

- Long-term Loans

- Advisory Services

Est. 1956 Est. 1988

Role:

Clients:

Products:

To promote institutional,

legal and regulatory

reform

Governments of member

countries with per capita

income between $1,025

and $6,055.

- Technical Assistance

- Loans

- Policy Advice

Shared Mission: “End extreme poverty and build shared prosperity”


Source: MIGA-EIU Political Risk Survey 2013.

Perceived Risks in Emerging Market Investment by Investors Percent of respondents


Typical Risks Faced by Investors and PRI Solutions

Inability to convert or transfer dividends or loan payments due to FX restrictions

Destruction or interruption of business due to political violence

Failure of government to honor obligations under key project documents (e.g. concessions, off take agreements)

Government nationalizes or otherwise makes it impossible to operate the project through discriminatory measures

Transfer and Convertibility Cover

War and Civil Disturbance Cover

Breach of Contract Cover

Expropriation Cover


Hyundai Engineering & Construction Co. (EPC Contractor)

Azito O&M-affiliated to Globeleq

(Operator)

Alstom Power Systems SA (Major Maintenance)

Azito Energie S.A.

Compagnie Ivoirienne de

l’Electricité - CIE (Electricity Off-taker)

Globeleq, IPS (Sponsors)

Shareholder Loan

Gas Sales Agreement

Irrevocable Instruction to Off-

take and pay

Concession Agreement

Direct Agreement

Proparco, BIO, DEG, FMO, EAIF, BOAD, BICICI

(Lenders)

Government of Côte d’Ivoire

Obligor Guarantee holder

Loan

Project: Conversion of the existing Azito Thermal Power Plant from simple-cycle to combined-cycle

20-year power purchase agreement with CIE

MIGA’s BoC cover on a shareholder loan from Globeleq

Tenor: 20 years

Amount: US$116.1m

Political Insurance – Breach of Contract, Energy Sector Azito Energie S.A., Côte d’Ivoire


Dubai Islamic Bank PJSC

Government of Djibouti

DP World Djibouti FZCO

State Owned Enterprise Concession

Shareholder

Standard Chartered Bank

WestLB AG

Direct Agreement

Project Company Doraleh Container

Terminal S.A.

Port Autonome International de Djibouti

Financiers Investment

Agent

Project Enterprise Doraleh Container Terminal Project

DCT Musharaka JV

Contributes X% Contributes X%

Musharaka (Financing) Guarantee


Project: Development, design, construction, management, operation, and maintenance of a new container port terminal in Doraleh, Djibouti

30-year concession from Govt. of Djibouti to DP World, UAE; and Port Autonome International of Djibouti

MIGA’s BoC, EXPRO, WCD & TR covers. MIGA’s first guarantee for an Islamic financing structure

Tenor: 10 years

Amount: $427m ($5m DP World equity and $422m Islamic project financing )

Shareholder

Political Insurance – Breach of Contract, Transportation sector Doraleh Container Terminal Project, Djibouti


Project: Construction of a heavy fuel oil plant near Nairobi (87 MW)

20-year power purchase agreement with Kenya Power and Lightning Co.

MIGA cover Breach of Contract of a loan from ABSA

Tenor: 15 years

Amount: US$62m


Govt. of Kenya

KPLC (SOE)

Indemnity

Guarantee

Reimbursement agreements

Letter of Support

L/C

Power Purchase

Agreement

Equity

Thika Power Ltd.

MAN Diesel + Melec Power Gen

EPC

MAN Diesel + Turbo France SAS

O&M

L/C Bank

Melec Power Gen (BVI)

Minority Investor

AfDB

ABSA Capital

Loan under “Common Terms Agreement”

Political Insurance – Breach of Contract Cover, Energy sector Thika Power Ltd., Kenya


Government of Zambia and

Zambia Development Agency


Chayton Africa

Zeder/PSG (South Africa)

Norfund (Norway)

Chayton Management

21.8% 73.4% 4.8%

Chobe Agrivision Company Ltd.

Project #2 Project #3

Commercial Lenders

IPPA

Project #1

Equity (100%)

Project: Master contract for Chayton Africa for investments in farming

3-year master contract leading to 3 specific investments projects (wheat and barley)

MIGA cover: BoC, TR, EXPRO and WCD

Tenor: 15 years for specific projects

Amount: US$50m

Equity

Political Insurance – Coverage for Private Equity, Agribusiness sector Chayton Africa, Zambia


Political Risk Insurance – Capital Optimization, Financial sector

Parent or Holding Bank

(consolidated level)

Central Bank Country A (Emerging Market)

Subsidiary Bank in County A


Mandatory Reserves

Subsidiary Bank in County B

Mandatory Reserves

Equity and/or Shareholder loan

Product: designed for global retail banks with significant emerging market operations

Coverage against expropriation of mandatory reserves held at Central Banks

Reduction of associated risk weights at the consolidated level, improving Capital Adequacy Ratios

Relief of capital provisions allow banks to increase capital deployment for other strategic purposes

Central Bank Holding Bank's

Country

Provisions for capital adequacy

Central Bank Country B (Emerging Market)


Lower funding costs for sovereign and sub-sovereign borrowers Long term financing for sovereign and sub-sovereign borrowers Lower funding costs and access to long term financing for public entities (SOEs)

Non Honoring of Sovereign Financial Obligations (NHSFO)

Non Honoring of Financial Obligations / SOEs (NHFO-SOE)

Credit Enhancement Solutions


Credit Enhancement – Non-Honoring of Sovereign Financial Obligations Cambambe Hydropower Plant, Angola


HSBC

Odebrecht EPC

Loan

Ministry of Finance

Funding

Cambambe Hydropower Dam Construction

Ownership Contract

Socgen HSBC BHF

Facility Agent

Operation

MINEA

Project: Expansion of a hydropower dam in Angola

Cover: NHSFO on a loan provided to the MOF by a consortium of banks, with HSBC acting as the Facility Agent

Tenor: 10.5 years

Amount: US$512m (incl. principal & interest)


Hermes ECA

Cesce ECA

Credit Enhancement – Non-Honoring of Sovereign Financial Obligations, Energy sector Cambambe Hydropower Plant, Angola

ENE


Project: Expansion of medium and long-term lending by the Hungarian Export-Import Bank through bond issue

MIGA Cover: NHSFO of Government of Hungary guarantee for Hungary Exim’s €400m debt issue

Amount: €424.4m, covering principal & interest

Tenor: 5.5 years

Issue rated AAA instead of BB+ (Hungary Sovereign Rating) resulting in lower funding costs and wider investor base


Ministry for National Economy of Hungary

Magyar Eximbank Secured Funding

(Ireland SPV)

Eximbank

MIGA Covered Noteholders

Uncovered Noteholders

Hungarian Exporters

Financing and Insurance Facilities

100% unconditional Sovereign Guarantee

€400m debt issue

€20m BB+ notes

Proceeds from AAA and

BB+ notes

€380m AAA-rated notes

Credit Enhancement – Non-Honoring of Sovereign Financial Obligations, Financial sector Magyar Export-Import Bank Zrt., Hungary


Credit Enhancement – Non-Honoring of Sovereign Financial Obligations Kadikoy-Kartal-Kaynarca Metro, Turkey


Funding

WestLB

Astaldi-Gulermak-Makyol JV (EPC)

Loan

Municipality of Istanbul

Kadikoy-Kartal-Kaynarca Metro Construction

Ownership

Contract

Société Générale

Credit Agricole

BNP Paribas

Facility Agent

Ulasim

Operator


ING UniCredit

Credit Enhancement – Non-Honoring of Sovereign Financial Obligations, Transport sector Kadikoy-Kartal-Kaynarca Metro, Turkey

Project: Expansion of underground metro system on Asian side of Istanbul, Turkey

MIGA Cover: NHSFO on a loan provided to MMI by a consortium of banks, with WestLB acting as Facility Agent

Tenor: 9.5 years

Amount: €280m, including principal, interest & premium


Non Honoring of Financial Obligations – State owned enterprises

New product, available since June 2013

Reserved for creditworthy/highly rated SOEs

SOE must be controlled by Government

SOE must be carrying out a public function

No counter-guarantee from sovereign government needed


Strong pre-claim management

Highly rated

Financially stable

Frontier markets risk mitigator

Protects clients’ social obligations

• Management of risks at pre-claim level (100+ pre claims among 750 guarantees -2 claims paid for Expro, 4 for WCD)

• Leveraging the World Bank network

• Highly rated multilateral by Basel II Committee

• Strong capital base • Access to reinsurance markets

• Mitigate different risks in emerging markets • Longer tenors (up to 20 years)

• Best practices in environmental and social standards

MIGA’s Value Added


1. MIGA in the World Bank Group 2. Credit Enhancement Solutions 3. NHSFO Projects in Emerging Countries 4. MIGA’s Value Added 5. MIGA’s Performance Appendix



Supported more than 750 projects

Issued record $2.8 billion of guarantees in

FY13 ended June 30

Note: CAGR (05 -13): 9.8%

MIGA’s Gross Exposure (US$ billion)


Gross Exposure By Region – FY13

Sector Breakdown – FY13

MIGA’s Issuances


1. MIGA in the World Bank Group 2. Credit Enhancement Solutions 3. NHSFO Projects in Emerging Countries 4. MIGA’s Value Added 5. MIGA’s Performance Appendix

• MIGA underwriting • Other project examples • MIGA contacts


Monitoring Investment Due Diligence

(Underwriting)

Management & Board Approvals

Environmental and Social Due Diligence

Disclosure period 30/60 days

Contract Negotiation & Issuance

Engaging MIGA

Initial Management Approval

Contract Execution

Initial Conversations Investments Due Diligence Contract

Negotiations

Technical and Commercial Due Diligence

Underwriting – Process and Timeline


Loan

Government of Panama –

Secretariat of the Metro

Citi BTMU Mizuho


Citi (Guaranteed by COFACE, CESCE);

Andean Dev. Corp; GoP cash & T Notes

Line One Consortium

EPC EPC Contract

TMB-Ayesa-Inelectra

O&M O&M Contract

Line 1 Metro Project

Project: Construction of first line of Republic of Panama metro-rail, connecting northern and southern Panama City

MIGA Cover NHSFO on a joint loan provided by Citi, BTMU, and Mizuho to the Government of Panama

Tenor: 12 years

Guarantee Amount: $320m, including principal & interest and premium

Loan

Credit Enhancement – Non-Honoring of Sovereign Financial Obligations, Transport sector Panama City Metro Project, Panama


Senior Multilateral

Lenders Senior

Lenders

Junior Lenders

Loans

Concession Agreement with Minimum Revenue

Guarantee


State of Côte d’Ivoire

Bouygues, PAIDF, AFC

FMO, BMCE, AFC

Bouygues, PAIDF, AFC

AfDB, BOAD, ECOWAS

Total CI

Banque Nationale d’Investissement

SOCOPRIM S.A.

Local Equity

Project: Design, construction and operation of a toll bridge in Abidjan, Côte d’Ivoire

First PPP in Côte d’Ivoire since civil war and one of the first in West Africa

MIGA covering equity and subordinated loans - Expro, W&CD, TR and BoC (incl. cover on State minimum revenue guarantee)

Tenor: 10-15 years

Amount: US$145m

Equity

Political Insurance – Expropriation, Transfer and Convertibility, Breach of Contract, War and Civil Disturbance, Transport sector Konan Bédié Bridge, Abidjan, Côte d’Ivoire


Sector Managers, Washington DC

Antonio BARBALHO Energy & Extractive Industries (Climate change) +1 202 473 6761 [email protected]

Nabil FAWAZ Agribusiness, Manufacturing, Services +1 202 473 8437 [email protected]

Olga SCLOVSCAIA Finance, Telecom

+1 202 458 2823 [email protected]

Margaret WALSH Infrastructure (Water & Transport)


MIGA Contact

Senior Management Team, Washington DC

Keiko HONDA Executive Vice-President


Michel WORMSER Vice-President, Chief Operating Officer +1 202 7878 [email protected]

Marcus WILLIAMS Chief Officer, Strategy, Communications & Partnerships +1 202 473 1023 [email protected]

Lakshmi SHYAM-SUNDER Director and Chief Financial Officer


Edith QUINTRELL Director, Operations


Kevin LU Regional Director –Asia

+65 65171201 [email protected]

Ravi VISH Director and Chief Economist +1 202 473 7723 [email protected]

Ana-Mita BETANCOURT Director and General Counsel


Muhamet Bamba FALL Infrastructure, Singapore


MIGA Hubs - Asia and Europe offices

Olivier LAMBERT Regional Manager - Europe

+33 1 40 69 31 58 [email protected]

Kevin LU Regional Director –Asia


mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


I N S U R I N G I N V E S T M E N T S E N S U R I N G O P P O R T U N I T I E S

www.miga.org

Documents

Multilateral Investment Guarantee Agency Enhancing ... · TMB-Ayesa-Inelectra O&M O&M Contract Line 1 Metro Project Project: Construction of first line of Republic of Panama metro-rail,